Indian stocks rise as crude oil slumps

Wholesale inflation up in February, but RBI rate hike already baked in

By

NickGodt

MUMBAI (MarketWatch) — Indian stocks rose Monday, even as Japanese shares fell sharply in the wake of Friday’s massive earthquake, with investors finding relief from a drop in crude-oil prices.

Nymex crude oil slumped to trade near $100 a barrel on concerns the impact of the devastating earthquake could hurt demand. See Futures Movers.

An increase in India’s inflation rate in February, meanwhile, failed to derail the advance, with another interest-rate hike by the Reserve Bank of India already baked into market prices.

The Sensex (SENSEX) gained 265.39 points, or 1.5%, to end at 18,439.48.

Gains on the Sensex were led by Reliance Communications (532712), up 4.4%; Tata Power (500400), up 3.7%; and Reliance Industries Ltd. (500325), up 2.6%.

Supply routes blocked in Japan

(8:51)

Residents are dealing with a lack of rations in parts of Japan, as transportation equipment is hampered in the aftermath of Friday's quake.

The S&P/CNX Nifty index (NIFTY) rose 1.6% to 5,531.50.

On the Bombay Stock Exchange, the oil-and-gas sector led the gains, with refiners feeling relief from lower crude.

On Friday, Indian stocks ended lower for the week, tracking broad losses in Asia after the powerful earthquake and tsunami that hit Japan.

Keeping the gains in check on Monday was an unexpected rise in the inflation rate in February.

The Commerce Ministry said India’s wholesale-price index rose 8.31% in February from the year-earlier period. In January, the WPI rose 8.23%.

The rate was also much more than the market expected. Economists surveyed by Dow Jones Newswires expected a reading of 7.8%.

December’s inflation rate was also revised higher to 9.41% from 8.43% previously.

However, markets already expected the central bank to deliver another quarter-point rate hike on Wednesday.

Weekly data on food- and fuel-price gauges also improved. India’s food-price index was up 9.52% in the week ended Feb. 26, compared with 10.39% in the previous week. The fuel-price index was up 9.48%, easing from 12.56%.

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